2023-05-02 13:24:30 ET
The share price of learning platform Chegg (NYSE: CHGG) cratered on Tuesday after the company reported solid first-quarter financial results, but warned that its business model is being disrupted by recently debuted artificial intelligence (AI) tools. As of 1:20 p.m. ET, Chegg stock was down by a stunning 49.3% and had hit a six-year low.
In the first quarter, Chegg generated net revenue of $187.6 million, ahead of management's guidance range of $184 million to $186 million. Moreover, management had been guiding for adjusted earnings before interest, taxes, depreciation, and amortization ( EBITDA ) in the $53 million to $55 million range, but outperformed with adjusted EBITDA of $57.6 million.
Chegg offers services -- including subscription services -- that help students with their studies. As of the end of 2022, Chegg had 8.2 million subscribers, which was up 5% from 2021. However, in Q1, the company's subscriber base fell to 8.1 million.
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Here's Why Chegg Stock Dropped Like a Rock Today